Overview
- Goldman Sachs initiated coverage with a Sell rating and a $26 target, citing limited visibility into improving profitability and margin‑dilutive deals, and shares fell about 6% Tuesday before holding near flat on Wednesday.
- Gross margin dropped to 9.3% in Q1 2026 from 13.1% a year earlier, and Goldman projects roughly 7.5% for 2026 as AI server margins remain in the single digits.
- Mizuho cut its target to $31 with a Neutral stance and BofA reiterated Sell at $34, while published targets span roughly $15 to $63 and the average hovers in the mid‑$40s.
- Competitive pressure from Dell and HPE and increasing standardization around Nvidia reference designs are compressing pricing power, with governance lapses and remediation efforts still weighing on sentiment.
- Management continues to expand U.S. manufacturing and direct liquid‑cooling capacity and is working with Nvidia on next‑generation rack‑scale platforms to speed deployments for AI data centers.